Retailers in Cave Creek, Carefree dread seeing sales tax top 10%

Faith Weinberg has conflicting views on a state sales-tax increase that, if approved, would bolster education but deliver a blow to local businesses.

A Cave Creek business owner and parent,Weinberg said local businesses are balking at the 1-cent-per-dollar hike that would propel Cave Creek's sales tax to 10.3 cents per dollar.

But she will likely vote for it anyway.

"It's intended to help the schools," said Weinberg, owner of Big Bronco store. "It's not just because I have a son in middle school, but it's the future of our children."

Proposition 100 on the May 18 ballot asks voters to adopt a three-year increase in the state sales tax, to 6.6 cents.

Two-thirds of its estimated $1 billion raised each year would go to state education. The remaining third would be earmarked for public safety and health and human services.

"The reality is, we must help our schools," said Weinberg, who sells Western furniture, trinkets and accessories at her store. "The question is, is there nowhere else to raise the funds?"

Cave Creek and Carefree rely on 3 percent local sales tax rates to offset a lack of a primary property tax in both towns.

Only four Maricopa County communities share the same rate - Gila Bend, Guadalupe, El Mirage and Youngtown, according to data provided by the League of Arizona Cities and Towns. Scottsdale, by contrast, has a 1.65 percent rate.

Combined with county and state sales taxes, shoppers in Cave Creek and Carefree now pay 9.3 cents per dollar on their purchases.

"People complain right now about the high tax," said Alex Akkurt, a Carefree business owner who sells Native American jewelry and accessories. "It's too high."

In Cave Creek, businesses felt the crunch last year, when the town increased its local sales-tax rate to 3 percent, from 2.5 percent. The tax was meant to offset a drop in revenue.

Some business owners, like Akkurt, have been forced to offer discounts or pay the tax to make sales.

In the current tough times, Smith said, she can't imagine another hit to her business, which she operates in downtown Carefree with business partner Melissa Price. The salon sells wigs and hair products that are taxable, she said.

"They play on the sympathy of us taxpayers," Smith said. "I don't like the way our elected officials take advantage of the good people of Arizona."

Proceeds from the hike would benefit the state, rather than a portion being distributed to local governments, said Ken Strobeck, executive director of the League of Arizona Cities and Towns. The benefits could trickle down to communities, he said.

"We think it's very important that the voters pass Prop. 100 in order to help the state get back on the path to fiscal balance and get over the economic downturn," Strobeck said.